ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Advantage an individual has in an activity if he / she can do it better than other people.
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Advantage an individual / nation has in producing goods / services; occurs when opportunity costs of producing goods / services are lower for that individual / nation than for other producers.
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Either A or B
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None of the above
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Detailed explanation-1: -Absolute advantage is the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time, or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors.
Detailed explanation-2: -Give an example in which one person has an absolute advantage in doing something but another person has a comparative advantage.-Comparative Advantage, ability to produce a good at a lower opportunity cost.-Farmer and Butcher. The Farmer can make wheat faster than the butcher can.
Detailed explanation-3: -The benefit of the theory of absolute advantage is that it can help countries maximize their productivity and efficiency. If one country has an absolute advantage over every other when it comes to producing one product, having that nation focus all of its resources on creating that product benefits the whole planet.
Detailed explanation-4: -Geography: A country’s location can provide proximity to natural resources, which can give it an absolute advantage over other countries. For example, one nation may produce oil more quickly and effectively than another country can, giving the former an absolute advantage.
Detailed explanation-5: -absolute advantage, economic concept that is used to refer to a party’s superior production capability. Specifically, it refers to the ability to produce a certain good or service at lower cost (i.e., more efficiently) than another party.